Recent proposal from SEBI to form a Self Regulatory Organisation (SRO), in order to regulate the Mutual Fund Industry is likely to open up plethora of opportunities for Fintech Companies/Startups, driving investments online. Entrepreneurs, aiming to take investor population to 100 million using technology, are gung ho about getting adequate representation in the Industry Regulatory Bodies since distribution of Mutual Fund is going to be digital.
With the growing number of players in the Mutual Fund distribution space, a need is felt by SEBI to intervene at right moment to prevent potential mis-selling in this field. An existing body like Association of Mutual Funds in India, popularly known as AMFI, could be converted to SRO. Every stakeholder in the distribution space in the form of Agents, Investment Advisors and Fintechs could be given independent representations in SRO and its governance may be monitored through participants.
Fintech companies like Zerodha and new entrant PayTm are gaining traction due to seamless access to the online investment platform being offered. Fintech companies tying up with Banks to offer instant funds transfer to Investors from savings account to brokerage account. Investors don't like paying fees for the Advisory services, especially retail ones. As long as AMCs recovering fund management charges or total expense ratio (TER) out of the fund corpus, investors are not bothered. Direct Plans of MFs suit the investment savvy customers whereas someone who is not financially literate a combination of Advisor who takes fee and direct plans could work well.
It is very much possible for fintech companies like Zerodha and PayTm to grow this market from 20 million to 30 million in no time due to their captive audience. Industry experts strongly feel that future of investments is technology driven, therefore, a separate forum for Fintech players would be the need of the hour. Prominent players namely PayTm Money, PhonePe, ET Money, Zerodha, Scripbox and others are technology driven platforms, which are capable of bringing in a major disruption in the technology driven investment space. Robo-Advisory using Artificial Intelligence could be game changer for the investors in near future.
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